This invention relates to systems and methods for trading within a spread market for a particular item. More particularly, systems and methods are provided to trade a particular item at the midprice of the spread market while maintaining anonymity of the order.
Electronic matching and dealing systems have found successful applications in many trading activities, including the buying and selling of a variety of items, such as goods, services, securities, and currency. Electronic trading systems have become popular for the trading of securities, particularly for the trading of fixed-income securities, such as United States Treasuries, United Kingdom Gilts, European Government bonds, and Emerging Market debts, and non-fixed income securities, such as stocks.
In a method of electronic trading, bids and offers are submitted by traders to a trading system. A bid indicates a desire to buy while an offer indicates a desire to sell. These bids and offers are then displayed by the trading system to other traders. The other traders may respond to these bids and offers by submitting sell (or hit) or buy (or lift or take) commands to the trading system. A trade has been executed once a trader has issued a hit or lift (or take) command to the trading system. A trade has been executed once a trader has issued a hit or lift (or take) command in response to a bid or offer, respectively.
In a market, there often exists a spread (a differential in price) between the bid price and the offer price, or between the buy price and sell price. Such markets having disparity among the bid and offer or buy and sell prices are often referred to as spread markets. In conventional spread markets, traders may hit a bid or lift an offer to execute a trade, or traders may submit new bids or offers that improve on existing bid or offer prices. In some occasions, a trader may not be willing to hit a bid or lift an offer for a given spread market, but would be willing to trade at a price located within the spread market. Such an ability to trade within the spread of the market could facilitate trading and thereby create a more liquid market.
However, conventional trading systems do not enable traders to submit buy or sell orders to trade at a price inside or at a midpoint of a spread market, in which the traded price is a price between the minimum allowable increments of the spread market. For example, if the market allows increments of 1, then an item may not be traded at 1.5. Rather, conventional trading systems require that a trader submits a new bid or offer and waits for another trader to hit or lift the new bid or offer in order to execute a trade. In addition, there are trading systems that allow traders to submit orders during a collection period. Then during a matching period, the collected orders are matched up with each other. This type of trading scheme does not provide for continuous trading because of the requisite collection period. Moreover, because orders are collected, a complex matching algorithm is needed to match the orders during the matching period.
In view of the foregoing, it would be desirable to provide an electronic market that enables a trader to buy or sell an item at a price existing within a spread market for a particular item at any given time.